Small Enterprise Finance Agency (sefa), an implementing agency of the Department of Small Business Development, is evolving, innovating, and partnering to assist in unlocking the potential of small, medium-sized and microenterprises (SMME’s) across South Africa.

Since its inception in 2012, sefa has provided access to finance, affordable credit and financial inclusion to SMMEs and cooperatives, with ambitions of creating and maintaining jobs, alleviating poverty and fostering economic inclusion and growth through various targeted evidence-based programmes and financial products tailored to respond to the needs of small businesses.

Capturing the journey and developmental impact of sefa over the past 12 years, sefa CEO Mxolisi Matshamba says that the agency has disbursed about R14.5-billion, as at 31st March 2023, enabling over 629 000 SMMEs and cooperatives to either start, grow or sustain their businesses, and facilitating more than 830 000 jobs.

Of this funding, R11.4-billion was allocated to black-owned enterprises, R5.5-billion to women-owned businesses, R2.9-billion to youth-owned enterprises, R99-million to businesses owned by people with disabilities, R2-billion to township-based enterprises and R4.1-billion to SMMEs in rural villages and towns.

Growing the number of SMMEs supported to about 72 870 a year, more than R1.4-billion has been disbursed between April and December 2023, with expectations that the agency will have exceeded R1.6-billion in disbursements by its financial year-end in March 2024. This would result in over R16-billion disbursements to the economy over its existence.

From microfinance initiatives to bridging finance solutions, sefa continues to introduce products and interventions that help small businesses mitigate various challenges, such as the cash flow challenges that many businesses face.

The agency’s blended finance products also provide grants and moratoriums linked to the anticipated time of the start of production.

Further, sefa’s credit guarantee programme, which issues a range of credit guarantee products to lenders, including commercial banks and other financial institutions, for SMME borrowers whose access to finance is impeded by the lack of collateral required by lenders, is growing significantly.

To this extent, the programme is achieving a capital leverage ratio of 6.25 times investment for every R1 of guarantee, meaning that, for every R100-million guaranteed by sefa, the banks extend R625-million credit to SMMEs.

sefa is currently engaging the World Bank and the European Union to obtain possible grants as it upscales and expands this programme, with the new innovative trade credit guarantee programme supporting small manufacturers by ensuring access to crucial inputs on credit terms, which alleviates cash flow constraints.

In the area of trade credit guarantee services offering, Matshamba cites a successful partnership with MacSteel, which provides steel and stock on credit to steel fabricators, with sefa providing a trade credit guarantee.

“Following the success of this programme, we are now reviewing other sectors where SMMEs are struggling to access manufacturing inputs,” he says, adding that corporate partnerships are forming an ever-critical part of sefa’s approach to reach more SMMEs and grow the SMME economy.

One such strong partnership is a joint fund with Sasol to finance the small businesses providing services to it, while another more recent partnership with bpSA will see millions of rands accessed by bpSA’s service providers and SMMEs with ambitions of opening bp petrol stations.

“We want to roll out this relationship across the industry and we also want to target partnerships with JSE-listed companies, for example, to unlock the balance sheets of the private sector.”

In line with this, Matshamba unveils sefa's forthcoming collaboration with the private sector to introduce crowdfunding initiatives, recognising the fiscal constraints faced by traditional financing avenues. Set to launch before the end of April, the crowdfunding product aims to generate increased private sector participation.

“We have identified a number of foreign investors who are interested in funding through Enterprise and Supplier Development Funds and social responsibility-related funds,” he explains.

In addition to partnerships and developing innovative solutions, the agency’s journey has led to township and rural economy development, with plans underway to scale its Township and Rural Entrepreneurship Programme (TREP), a blended finance and business development support product supporting township and rural-based businesses.

Since the start of the programme, about R900-million has been disbursed to SMMEs in townships and rural areas, creating about 1 580 jobs and maintaining another 8 500 jobs, through the support of 2 600 township and rural SMMEs that have benefited from the programme.

The scheme supports small enterprises operating in townships and rural areas across sectors such as clothing and textile; bakeries and confectionaries; tshisanyama and cooked food; retail; automotive; personal care and artisans, besides others.

The successful TREP programme is currently being restructured to include and respond to peri-urban-based enterprises areas as well, in addition to considerations of an increased financing solution for applications of businesses that have the potential to expand further, such as the opening of several spaza shop or a chain of operations.

To further support township SMMEs, partnerships with intermediaries will enable township and rural SMME’s to effectively compete, with R75-million set aside for bulk buying options for spaza shops, providing point of sales, stock management and marketing training and the establishment of distribution centres closer to the townships and some rural areas.

This will enable township and rural SMMEs to reap the benefits of cash or quantity discounts while expanding the number of operations.

As sefa looks to the future, it is planning to merge with its sister agency, the Small Enterprise Development Agency, which provides nonfinancial support to SMMEs, along with the Co-operative Banks Development Agency located in the National Treasury, boosting the capacity and resources available to reach and assist more SMMES.

The merger, expected to be completed in April, will create a one-stop shop for SMMEs when they apply for funding, with transactions assessed from cradle to grave and aligning all the requirements of all three agencies.

Disclaimer:

Access to sefa services is free and sefa does not make use of private consultants.

Contact: www.sefa.org.za

Enquiries: helpline@sefa.org.za

sefa Fraud Hotline: 0800 000 663